5 Ways to Keep Your HOA's Financial Stability
Your homeowner's association (HOA) will achieve success when its financial health is maintained. Your role as an HOA board member goes beyond ensuring that fees get paid in a timely fashion. You should be involved in the budget-making process and monitoring of financial expenses. Board members provide the availability of funds to cater to the daily needs and future projects and repairs of their HOA. You can implement different techniques to manage your association's funds, preventing future inconveniences. We have compiled the best five financial tips for managing your HOA funds to ensure financial stability.
1. Consistent Financial Assessments
To determine the HOA's financial position, the board must regularly evaluate its expenses and income using financial tools like balance sheets, cash disbursements ledger, and other financial records. All transactions that the HOA makes must get recorded and kept well for future reference. The board will be required to make optimal decisions depending on the monetary status of the association shown by these records. When assessing the financial records of your HOA, the following observations show that your association is financially stable:-
- Suppliers are getting paid as required.
- Enough reserve funds.
- Lower or no bills owed.
- Expenses conform to the budget.
Regular assessment of financial documents helps eliminate irregular patterns and unrealistic expenses. All expenses will be accounted for, ensuring that funds are spent and earned as per the board's projection.
2. Collection of Fees
The fees paid by members of the homeowners' association are vital in simulating its operations. When a member fails to pay their fees, it will affect the agreed budget. The association's operations would be crippled if fees weren't collected regularly.
You must put some mechanisms in place for paying dues to ensure that all members pay.
- Financial transparency — accountability for all the expenses incurred by the HOA.
- Monitoring all members to ensure payments are received.
- Set deadlines that homeowners must follow.
- Share the annual budget with members.
- Assign collection duties to different personnel, like community managers.
- Make payment and collection policies and enforce them.
3. Performing Regular Financial Audits
You might sometimes overestimate the financial status of your association. Auditing helps in assuring that the financial statements presented are for the better interest of the HOA. You can hire an expert to conduct the audit and provide professional advice on the financial procedures used. That will help you identify weaknesses in your accounting processes. The board members can modify the financial techniques to improve the association's financial management operations.
4. Outsource Professional Accounting Services
Having a professional accountant in your association will ensure financial stability by providing attention to detail about your finances. An accountant can conduct audits and ensure that the HOAs documents are accurate. Having a certified public accountant will ensure that your HOA adheres to the government's regulations. A CPA can perform different vital duties that will maintain the financial health of your HOA. These can include:-
- Evaluating reports.
- Providing critical financial advice.
- Helping your HOA with saving more funds and reserve fund planning.
You have to choose an accountant specialized in HOAs to increase their efficiency.
5. Assessing the Effectiveness of the Services Provided
Unnecessary and ineffective services can be damaging to the finances of your HOA. Regularly review the community services provided and determine their relevance to the association. Eliminating unnecessary expenses will help in saving more funds. A board member must review all contracts to ensure that their association gets exposed to quality services at the correct costs. You can look for alternative vendors providing quality but cheaper services.